Two Important Business Strategies that Everyone Can Learn from Elon Musk’s Latest Patent Decision

We live in a world where patent trolling is rapidly dismantling the U.S. consumer market. A single company can burn millions in a go to buy patents and make their business more profitable. A single company can threaten legal action against hundreds and thousands of companies leaving them on the verge of bankruptcy.

A rarity among patent trolls, Tesla Motors Inc. CEO Elon Musk, announced that Tesla patent portfolio will now come under an open-source-inspired agenda for the world, even for some of its biggest competitors.

Musk with the Tesla Model S in Fremont.

As Musk it in the blog post: “Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

Here are a two good business lessons to learn from Elon Musk’s recent business strategy.

1. Market expansion rather than an astute business strategy. As Elon Musk put it in the blog post : "Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world's factories every day". Musk pledged that inventions on his electric cars and batteries will be free for anybody to use “in good faith”. Rather than fretting over competitors and innovations trying to copy their technology, Tesla hopes that by making it open source it will help them expand the overall market for electric vehicles, thereby speeding of their technology or even creating a new potential market.

     2.  PR over Rivalry – any day! Tesla is the very same company that pioneered a movement of ‘lowered cost and increased safety of battery packs’ in the auto industry. “I don’t think people quite appreciate the gravity of what is going on [with regard to global warming] or just how much inertia the climate has,” Musk said during a conference call. “We really need to do something. It would be shortsighted if we try to hold these things close to our vest.” Tesla by ripping the whole packet of patents on its pioneering electric cars and its technology, even for rivals with nothing is return but goodwill is an excellent PR move. The gesture is multi-dimensional – a ‘push to change the automotive industry and step up its game’ and ‘innovation for all of mankind’.  It is a calculated PR business strategy under a saccharine coated ‘philanthropist move’.

 Tesla has over 160 issued U.S. patents according to the website of the U.S. Patent and Trademark Office.